There are many positive signs in the housing market right now that suggest 2012 may be the best year for real estate since the subprime meltdown in 2007. However, the recovery has been inhibited so far due to lenders’ reluctance to originate enough new mortgages to meet buyer demand, experts said yesterday at the 2012 REALTORS® Midyear Legislative Meetings & Trade Expo.

That hesitation stems from a number of factors, ranging from continued elevated levels of unemployment to deep staff cuts in financial institutions’ mortgage servicing departments, said Federal Reserve Governor Elizabeth Duke, who spoke at a joint Real Estate Services/Regulatory Issues Forum yesterday morning. And she added that lenders needed to tighten up credit immediately following the financial collapse.

However, she argued that present lending levels are far too constrained and that the biggest challenge to lender confidence today is the lack of clarity around the current regulatory and political environment. Specifically, Duke cited ambiguous standards for qualified residential mortgages and servicer compensation, as well as delayed reforms of government-sponsored enterprises Fannie Mae and Freddie Mac, as contributing to this problem.

“Perhaps the most important solution I’m suggesting today is that policymakers move forward with the difficult decisions that will affect the future of the mortgage market,” she said. “It will not be easy to decide what to do about the GSEs, or how best to promote a robust secondary market, or what form crucial regulations should ultimately take. And it is unlikely that anyone, including REALTORS®, will fully agree with the final decisions that are made. Nevertheless, until these tough decisions are made, uncertainties will continue to hinder access to credit, the evolution of the mortgage finance system, and the ultimate recovery in the housing market.”

In a panel discussion that immediately followed Duke’s presentation, Michael Stegman, counsel to the secretary of the treasury for housing finance policy, acknowledged the need for GSE reform. He said this issue would further be addressed by the Treasury Department “sometime in the spring,” and wryly noted that spring goes through the first three weeks of June.

Copanelist J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, said the GSEs didn’t need wholly new reforms so much as a return to pre–housing boom policies and standards. “The basic core GSE programs are solid, time has shown that they’re solid, and we need to make sure that we don’t foul it up,” he said.

Scott added that the continued, drawn-out discussions around regulatory and policy issues were not helping the housing market. “End the conversation about changing the mortgage interest deduction,” he said. “End the conversation about 20 percent down payments for QRM.”

That theme of ambiguity in the political sphere continued into the afternoon. The panelists at the Real Estate Summit general session maintained that new rules and institutions weren’t necessarily needed at this point. Instead, they argued that the housing recovery wouldn’t get into full swing until the existing laws, policies, and regulatory authorities settled into a predictable, stable overall system.

“You don’t know what’s coming out of the chute next,” said Cutler Dawson, president and CEO of the Navy Federal Credit Union. “You don’t know if you’ll get a new appraisal system or something else. I almost wish we could have a moratorium on new ideas.”

“One thing the regulatory system should do is define the rules,” Moody’s Chief Economist Mark Zandi said. “Once we know what the rules are, we’ll get the market going again.”